Atmos Energy Corporation (NYSE:ATO) today reported consolidated
results for its 2008 fiscal year and fourth quarter ended September
30, 2008. Fiscal 2008 net income was $180.3 million, or $2.00 per
diluted share, compared with net income of $168.5 million, or $1.92
per diluted share, the prior year. Fiscal 2007 net income included
a noncash after-tax charge of $4.1 million, or $0.05 per diluted
share, related to the write-off of obsolete software and a
nonregulated gas gathering project. Regulated operations
contributed $134.1 million of net income, or $1.49 per diluted
share during fiscal 2008, compared with $107.9 million of net
income, or $1.23 per diluted share, during fiscal 2007.
Nonregulated operations contributed $46.2 million of net income
during fiscal 2008, or $0.51 per diluted share, compared with $60.6
million of net income, or $0.69 per diluted share, during fiscal
2007. Unrealized margins contributed $0.20 and $0.14 of net income
per diluted share for fiscal 2008 and 2007. Atmos Energy affirmed
its fiscal 2009 earnings guidance of $2.05 to $2.15 per diluted
share. For the three months ended September 30, 2008, net income
was $1.6 million, or $0.02 per diluted share, compared with a net
loss of $5.9 million, or ($0.07) per diluted share, for the same
period last year. Regulated operations reported a seasonal net loss
of $14.7 million, or ($0.16) per diluted share, during the fiscal
2008 fourth quarter, compared with a seasonal net loss of $13.7
million, or ($0.15) per diluted share, in the prior-year period.
Nonregulated operations contributed $16.3 million of net income
during the fourth quarter of fiscal 2008, or $0.18 per diluted
share, compared with $7.8 million of net income, or $0.08 per
diluted share, in the prior-year quarter. Results for nonregulated
operations for the prior-year quarter included an after-tax charge
of $2.0 million, or $0.02 per diluted share, to write off costs
associated with a nonregulated natural gas gathering project.
Unrealized margins contributed $0.11 and $0.12 of net income per
diluted share for the three months ended September 30, 2008 and
2007. �We are extremely pleased with the financial results achieved
in fiscal 2008,� said Robert W. Best, chairman and chief executive
officer of Atmos Energy Corporation. �Regulated operations
contributed 74 percent of our consolidated net income and
experienced a year-over-year boost in earnings per share of more
than 20 percent. We remain committed to enhancing the stability and
predictability of our regulated earnings by making incremental
improvements to rate design and making prudent, strategic
investments in rate base. Our nonregulated operations contributed
the remaining 26 percent of consolidated net income, reflecting the
tenacity of this business in an environment of weakened natural gas
market volatility and economic downturn. �Looking forward to fiscal
2009 and beyond, we remain focused on continuing to achieve annual
earnings growth per share in the 4 percent to 6 percent range, on
average,� Best said. Results for the Year Ended September 30, 2008
Natural gas distribution gross profit increased to $1.0 billion for
the year ended September 30, 2008, compared with $952.7 million in
the same period last year, before intersegment eliminations. The
$53.4 million year-over-year increase primarily reflects a net
$40.7 million increase in rates and a $7.5 million accrual recorded
during the fiscal 2007 fourth quarter for estimated unrecoverable
gas costs that did not recur in the current year. Regulated
transmission and storage gross profit increased $32.7 million to
$195.9 million for the year ended September 30, 2008, compared with
$163.2 million in the prior year, before intersegment eliminations.
The 20 percent increase primarily reflects higher revenues
resulting from the company�s 2006 and 2007 filings under the Texas
Gas Reliability Infrastructure Program (GRIP). Regulated
transmission and storage gross profit also benefited from continued
favorable market conditions in the Barnett Shale gas producing
region in Texas, resulting in an 18 percent increase in
consolidated throughput and higher per-unit margins. Natural gas
marketing gross profit decreased $11.3 million to $93.0 million for
the year ended September 30, 2008, compared with $104.3 million in
the prior year, before intersegment eliminations. The decrease
primarily reflects a $35.0 million decrease in Atmos Energy
Marketing�s (AEM) realized storage and trading activities resulting
from a less-volatile natural gas market as well as AEM�s decision
to defer physical storage withdrawals and reset its associated
financial positions to forward months to increase the potential
gross profit in future periods. Delivered gas margins increased
$16.6 million as a result of capturing favorable basis gains
coupled with a 5 percent increase in consolidated sales volumes.
AEM�s unrealized margins increased $7.1 million during the 2008
fiscal year compared with the prior year, principally due to a
narrowing of the spreads between current cash prices and forward
natural gas prices. Pipeline, storage and other gross profit
decreased $4.3 million to $28.3 million for the year ended
September 30, 2008, compared with $32.6 million in the prior year,
before intersegment eliminations. The decrease was largely due to
lower realized margins from storage and asset optimization
activities in a less-volatile natural gas market, which created
fewer opportunities to capitalize on price fluctuations.
Consolidated operation and maintenance expense for the year ended
September 30, 2008, was $500.2 million, compared with $463.4
million last year. The $36.8 million increase primarily reflects
higher pipeline maintenance, odorization, fuel and administrative
costs. Additionally, the prior-year expense included the favorable
effect of the Louisiana Public Service Commission�s decision to
permit the recovery of $4.3 million of Hurricane-Katrina-related
expenses from customers. Continued effective collection efforts
during fiscal 2008 partially offset the increase in consolidated
operation and maintenance expense. Bad debt expense decreased $4.0
million to $15.7 million, from $19.7 million last year, despite a
12 percent year-over-year increase in gas costs. Interest charges
for the year ended September 30, 2008, were $137.9 million,
compared with $145.2 million in the prior year. The $7.3 million
year-over-year decrease primarily was due to lower average
short-term debt balances experienced in the current period. This
favorable variance was partially offset by a $6.3 million decrease
in interest income principally associated with lower average cash
balances in the current fiscal year. Interest income is reported as
a component of miscellaneous income. Operating expenses for the
year ended September 30, 2007, included a $6.3 million noncash
charge associated with the write-off of approximately $3.0 million
of costs related to a nonregulated natural gas gathering project
and about $3.3 million of obsolete software costs. The
capitalization ratio at September 30, 2008, was 54.6 percent,
compared with 53.7 percent at September 30, 2007. Short-term debt
of $350.5 million was comprised of $330.5 million of borrowings
under the company�s existing lines of credit and $20.0 million of
commercial paper. Short-term debt was $150.6 million at September
30, 2007, representing amounts outstanding under the company�s
commercial paper program. Operating cash flow for the year ended
September 30, 2008, was $370.9 million, compared with $547.1
million during fiscal 2007. The $176.2 million decrease primarily
reflects the unfavorable timing of gas cost collections, an
increase in cash required to collateralize risk management accounts
as of September 30, 2008, and changes in various other working
capital items. Capital expenditures increased to $472.3 million for
the year ended September 30, 2008, from $392.4 million for the same
period last year. The $79.9 million increase principally reflects
spending in the Mid-Tex Division for the replacement of mains and
regulatory compliance, the company�s new automated metering
initiative in its natural gas distribution business and spending
associated with two nonregulated growth projects. Results for the
2008 Fourth Quarter Ended September 30, 2008 Natural gas
distribution gross profit increased $22.2 million to $175.4 million
for the three months ended September 30, 2008, compared with $153.2
million in the same period last year, before intersegment
eliminations. The increase primarily reflects a net $9.1 million
increase in rates and the aforementioned $7.5 million accrual for
estimated unrecoverable gas costs that did not recur in the current
period. Regulated transmission and storage gross profit increased
$12.5 million to $53.1 million for the three months ended September
30, 2008, compared with $40.6 million for the prior-year quarter.
This increase primarily reflects higher revenues resulting from the
company�s 2006 and 2007 filings under the Texas Gas Reliability
Infrastructure Program (GRIP). Regulated transmission and storage
gross profit also benefited from continued favorable market
conditions in the Barnett Shale gas producing area, resulting in
the realization of higher per-unit margins and a 14 percent
increase in consolidated throughput. Natural gas marketing gross
profit increased $14.7 million to $33.4 million for the three
months ended September 30, 2008, compared to $18.7 million for the
same period one year ago, before intersegment eliminations. The
increase primarily reflects increased storage and trading margins
as AEM realized a portion of the storage withdrawal gains that it
captured earlier in the fiscal year after deferring storage
withdrawals and resetting financial positions to forward months.
Delivered gas margins increased $5.3 million largely due to AEM�s
ability to earn higher per-unit margins from volatility
attributable to weather-related events, which more than offset a 14
percent decrease in consolidated sales volumes. AEM�s unrealized
margins decreased $4.6 million during the current quarter, compared
with the prior-year quarter, principally due to a widening of the
spreads between current cash prices and forward natural gas prices.
Pipeline, storage and other gross profit increased $3.7 million to
$9.5 million for the three months ended September 30, 2008, from
$5.8 million for the three months ended September 30, 2007, before
intersegment eliminations. The increase primarily reflects higher
unrealized margins. Consolidated operation and maintenance expense
for the three months ended September 30, 2008, was $141.2 million,
compared with $121.0 million for the three months ended September
30, 2007. The $20.2 million increase primarily reflects higher
pipeline maintenance, employee and other administrative costs. Bad
debt expense for the quarter was essentially flat compared with the
prior-year quarter. Operating expenses for the three months ended
September 30, 2007, included a $3.0 million noncash charge
associated with the write-off of costs related to a nonregulated
natural gas gathering project. Outlook The leadership of Atmos
Energy remains focused on enhancing shareholder value by delivering
consistent earnings growth. In October 2008, Atmos Energy announced
that it expected fiscal 2009 earnings to be in the range of $2.05
to $2.15 per diluted share, excluding any material mark-to-market
impact. Net income from regulated operations is expected to be in
the range of $140 million to $145 million, and net income from
nonregulated operations is expected to be in the range of $47
million to $52 million. Capital expenditures for fiscal 2009 are
expected to range from $510 million to $525 million. Operation and
maintenance expense is expected to range from $480 million to $490
million in fiscal 2009. The average number of shares outstanding in
fiscal 2009 is expected to be between 91 million and 92 million.
However, the mark-to-market impact on the nonregulated marketing
company�s physical storage inventory at September 30, 2009, and
changes in events or other circumstances that the company cannot
currently anticipate or predict, including adverse credit market
conditions, could result in earnings for fiscal 2009 that are
significantly above or below this outlook. Factors that could cause
such changes are described below in Forward-Looking Statements and
in other company documents on file with the Securities and Exchange
Commission. Atmos Energy believes it has sufficient liquidity to
support its operating and capital spending plans. Amounts available
to the company under existing and new credit facilities coupled
with operating cash flow should provide the necessary liquidity to
fund the company�s common stock dividend, working capital needs and
capital expenditures for fiscal 2009. Conference Call to be Webcast
November 12, 2008 Atmos Energy will host a conference call with
financial analysts to discuss the financial results for the 2008
fiscal year on Wednesday, November 12, 2008, at 8 a.m. ET. The
telephone number is 800-218-8862. The conference call will be
webcast live on the Atmos Energy Web site at www.atmosenergy.com. A
slide presentation and a playback of the call will be available on
the Web site later that day. Atmos Energy officers who will
participate in the conference call include: Bob Best, chairman and
chief executive officer; Kim Cocklin, president and chief operating
officer; Pat Reddy, senior vice president and chief financial
officer; Mark Johnson, senior vice president, nonregulated
operations; Fred Meisenheimer, vice president and controller;
Laurie Sherwood, vice president, corporate development, and
treasurer; and Susan Giles, vice president, investor relations.
Other Highlights and Recent Developments Election of New Director
On August 6, 2008, Ruben E. Esquivel was elected to the Board of
Directors, effective September 1, 2008, with his term expiring at
the 2009 annual meeting of shareholders. Mr. Esquivel was also
appointed to serve as a member of the Audit Committee and Human
Resources Committee. With Mr. Esquivel�s election, the company
currently has 14 directors serving on its Board of Directors.
Appointment of President and Chief Operating Officer Effective
October 1, 2008, Kim R. Cocklin became the president and chief
operating officer of Atmos Energy Corporation. Mr. Cocklin
previously served as senior vice president of the company�s
regulated operations. Robert W. Best continues to serve as the
chairman and chief executive officer. $212.5 Million Revolving
Credit Facility On October 29, 2008, Atmos Energy Corporation
entered into a $212.5 million, 364-day committed revolving credit
facility. The credit facility will expire on October 27, 2009. This
credit facility replaces the company�s $300 million, 364-day
revolving credit facility on essentially the same terms but at a
substantially higher cost. This news release should be read in
conjunction with the attached unaudited financial information.
Forward-Looking Statements The matters discussed in this news
release may contain �forward-looking statements� within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements other than
statements of historical fact included in this news release are
forward-looking statements made in good faith by the company and
are intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of
1995. When used in this news release or in any of the company�s
other documents or oral presentations, the words �anticipate,�
�believe,� �estimate,� �expect,� �forecast,� �goal,� �intend,�
�objective,� �plan,� �projection,� �seek,� �strategy� or similar
words are intended to identify forward-looking statements. Such
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
discussed in this news release, including the risks and
uncertainties relating to regulatory trends and decisions, the
company�s ability to continue to access the capital markets and the
other factors discussed in the company�s filings with the
Securities and Exchange Commission. These factors include the risks
and uncertainties discussed in the company�s Annual Report on Form
10-K for the fiscal year ended September 30, 2007, and in the
company�s Quarterly Report on Form 10-Q for the three and nine
months ended June 30, 2008. Although the company believes these
forward-looking statements to be reasonable, there can be no
assurance that they will approximate actual experience or that the
expectations derived from them will be realized. The company
undertakes no obligation to update or revise forward-looking
statements, whether as a result of new information, future events
or otherwise. About Atmos Energy Atmos Energy Corporation,
headquartered in Dallas, is the country's largest natural-gas-only
distributor, serving about 3.2 million natural gas distribution
customers in more than 1,600 communities in 12 states from the Blue
Ridge Mountains in the East to the Rocky Mountains in the West.
Atmos Energy also provides natural gas marketing and procurement
services to industrial, commercial and municipal customers
primarily in the Midwest and Southeast and manages company-owned
natural gas pipeline and storage assets, including one of the
largest intrastate natural gas pipeline systems in Texas. Atmos
Energy is a Fortune 500 company. For more information, visit
www.atmosenergy.com. � Atmos Energy Corporation Financial
Highlights (Unaudited) � Statements of Income � Year EndedSeptember
30 � Percentage (000s except per share) � 2008 � � � 2007 � Change
� Gross Profit: Natural gas distribution segment $ 1,006,066 $
952,684 6 % Regulated transmission and storage segment 195,917
163,229 20 % Natural gas marketing segment 93,021 104,311 (11 )%
Pipeline, storage and other segment 28,313 32,608 (13 )%
Intersegment eliminations � (1,991 ) � (2,750 ) 28 % Gross profit
1,321,326 1,250,082 6 % � Operation and maintenance expense 500,234
463,373 8 % Depreciation and amortization 200,442 198,863 1 %
Taxes, other than income 192,755 182,866 5 % Impairment of
long-lived assets � � � � 6,344 � (100 )% Total operating expenses
893,431 851,446 5 % � Operating income 427,895 398,636 7 % �
Miscellaneous income 2,731 9,184 (70 )% Interest charges � 137,922
� � 145,236 � (5 )% � Income before income taxes 292,704 262,584 11
% Income tax expense � 112,373 � � 94,092 � 19 % Net income $
180,331 � $ 168,492 � 7 % � Basic net income per share $ 2.02 $
1.94 Diluted net income per share $ 2.00 $ 1.92 � Cash dividends
per share $ 1.30 $ 1.28 � Weighted average shares outstanding:
Basic 89,385 86,975 Diluted 90,272 87,745 � Year EndedSeptember 30
� Percentage Summary Net Income by Segment (000s) 2008 � 2007
Change � Natural gas distribution $ 92,648 $ 73,283 26 % Regulated
transmission and storage 41,425 34,590 20 % Natural gas marketing
29,989 45,769 (34 )% Pipeline, storage and other � 16,269 � 14,850
10 % Consolidated net income $ 180,331 $ 168,492 7 % � Atmos Energy
Corporation Financial Highlights, continued (Unaudited) �
Statements of Income � Three Months EndedSeptember 30 � Percentage
(000s except per share) � 2008 � � � 2007 � Change � Gross Profit:
Natural gas distribution segment $ 175,414 $ 153,227 14 % Regulated
transmission and storage segment 53,145 40,582 31 % Natural gas
marketing segment 33,357 18,700 78 % Pipeline, storage and other
segment 9,457 5,807 63 % Intersegment eliminations � (301 ) � (528
) 43 % Gross profit 271,072 217,788 24 % � Operation and
maintenance expense 141,170 121,000 17 % Depreciation and
amortization 52,783 49,828 6 % Taxes, other than income 39,585
33,172 19 % Impairment of long-lived assets � � � � 3,055 � (100 )%
Total operating expenses 233,538 207,055 13 % � Operating income
37,534 10,733 250 % � Miscellaneous income (loss) (243 ) 1,501 (116
)% Interest charges � 34,119 � � 35,963 � (5 )% � Income (loss)
before income taxes 3,172 (23,729 ) 113 % Income tax expense
(benefit) � 1,590 � � (17,815 ) 109 % Net income (loss) $ 1,582 � $
(5,914 ) 127 % � Basic net income (loss) per share $ 0.02 $ (0.07 )
Diluted net income (loss) per share $ 0.02 $ (0.07 ) � Cash
dividends per share $ .325 $ .320 � Weighted average shares
outstanding: Basic 89,883 88,581 Diluted 90,761 88,581 � Three
Months EndedSeptember 30 � Percentage Summary Net Income (Loss) by
Segment (000s) � 2008 � � � 2007 � Change � Natural gas
distribution $ (20,794 ) $ (19,181 ) (8 )% Regulated transmission
and storage 6,089 5,504 11 % Natural gas marketing 10,424 5,401 93
% Pipeline, storage and other � 5,863 � � 2,362 � 148 %
Consolidated net income (loss) $ 1,582 � $ (5,914 ) 127 % � Atmos
Energy Corporation Financial Highlights, continued (Unaudited) �
Condensed Balance Sheets � September 30, � September 30, (000s)
2008 2007 � Net property, plant and equipment $ 4,136,859 $
3,836,836 � Cash and cash equivalents 46,717 60,725 Accounts
receivable, net 477,151 380,133 Gas stored underground 576,617
515,128 Other current assets � 184,619 � 111,189 � Total current
assets 1,285,104 1,067,175 � Goodwill and intangible assets 739,086
737,692 Deferred charges and other assets � 225,650 � 253,494 � $
6,386,699 $ 5,895,197 � � � Shareholders� equity $ 2,052,492 $
1,965,754 Long-term debt � 2,119,792 � 2,126,315 � Total
capitalization 4,172,284 4,092,069 � Accounts payable and accrued
liabilities 395,388 355,255 Other current liabilities 460,372
408,273 Short-term debt 350,542 150,599 Current maturities of
long-term debt � 785 � 3,831 � Total current liabilities 1,207,087
917,958 � Deferred income taxes 441,302 370,569 Deferred credits
and other liabilities � 566,026 � 514,601 � $ 6,386,699 $ 5,895,197
� Atmos Energy Corporation Financial Highlights, continued
(Unaudited) � Condensed Statements of Cash Flows � Year Ended
September 30 (000s) � 2008 � � � 2007 � � Cash flows from operating
activities � Net income $ 180,331 $ 168,492 Impairment of
long-lived assets � 6,344 Depreciation and amortization 200,589
199,055 Deferred income taxes 97,940 62,121 Changes in assets and
liabilities (127,132 ) 89,813 Other � 19,205 � � 21,270 � Net cash
provided by operating activities 370,933 547,095 � Cash flows from
investing activities � Capital expenditures (472,273 ) (392,435 )
Other, net � (10,736 ) � (10,436 ) Net cash used in investing
activities (483,009 ) (402,871 ) � Cash flows from financing
activities � Net increase (decrease) in short-term debt 200,174
(213,242 ) Net proceeds from long-term debt offering � 247,217
Settlement of Treasury lock agreement � 4,750 Repayment of
long-term debt (10,284 ) (303,185 ) Cash dividends paid (117,288 )
(111,664 ) Net proceeds from equity offering � 191,913 Issuance of
common stock � 25,466 � � 24,897 � Net cash provided by (used in)
financing activities � 98,068 � � (159,314 ) � Net decrease in cash
and cash equivalents (14,008 ) (15,090 ) Cash and cash equivalents
at beginning of period � 60,725 � � 75,815 � Cash and cash
equivalents at end of period $ 46,717 � $ 60,725 � � Three Months
EndedSeptember 30 � Year EndedSeptember 30 Statistics 2008 � 2007
2008 � 2007 Consolidated natural gas distribution throughput (MMcf
as metered) 62,057 60,789 429,354 427,869 Consolidated regulated
transmission and storage transportation volumes (MMcf) 165,784
146,046 595,542 505,493 Consolidated natural gas marketing sales
volumes (MMcf) 91,041 106,343 389,392 370,668 Natural gas
distribution meters in service 3,191,779 3,187,127 3,191,779
3,187,127 Natural gas distribution average cost of gas $11.39 $7.29
$9.05 $8.09 Natural gas marketing net physical position (Bcf) 8.0
12.3 8.0 12.3
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